It is impossible to understand the reasoning and motivation behind medical cannabis prohibition without first understanding the origins of the Euro-American Opium Cartel, which is and always will remain medical marihuana’s fiercest foe simply due to the nature of the Cartel’s business. The Opium Cartel is the first true American cartel in terms of the modern understanding of the word and its rise to prominence built many of the companies, fortunes, powerful families and powerful figures that exist today.
The Opium Cartel predates other American Cartels, monopolies, oligopolies and forms of oligarchy in the United States because it is an inherited Cartel, a union of sorts between Anglo and American pharmaceutical interests that developed over the course of several major wars and really created the catalyst today for what is called “The Special Relationship” between the US and the UK. The Opium Cartel exists today, but is more difficult to identify because its inheritors have greatly diversified it beyond its pharmaceutical heritage. The “Cartel” as it exists today is a consortium that encompasses many companies that are well known, and hold reins of power within many institutions in Washington DC and London.
As mentioned in the previous reading, William Huntington Russell held major political influence due to his involvement in the opium trade. His cousin, Samuel Russell, was one of the first enterprising opium traders that emerged in 1819 to trade with China as the United States participated in the opening of Chinese trade with Great Britain. The United States had turned to opium trading as a means of new revenue after the end of the Napoleonic Wars as cannabis/hemp demand declined and export revenues declined along with it. The western powers turned their focus to Asia for economic growth.
Opium had been used in China since the 7th century as a medicine for pain and surgery, but in the 17th century more opium had been introduced by European traders as a recreational drug, mixed with tobacco and smoked from a long pipe and bowl over a lamp that would vaporize the opium. Europeans opened Opium Dens in China and became a profitable venture as Chinese opium addicts began to emerge. Great Britain, desiring to control Chinese trade and limit Chinese government resources, saw the opium dens and emerging opiate addictions within China as a geostrategic opportunity.
The western powers resented China’s regulation of western trade through the Canton System. The system restricted western trade to the port of Canton, much like how the People’s Republic of China today restricts western factories to certain ‘special economic zones’. The powers, including the US, were only allowed to operate out of the ’13 Hongs’ or 13 Factories in Canton each of which had to be headed by a Chinese merchant chosen by the Qing Emperor. This consortium of Chinese merchants were allowed to fix prices, imposes taxes and regulate the 13 Factories as they saw fit even in unfair ways. This draws a striking parallel to US-Chinese relations that have developed since the 1970’s and 2000’s, as US companies are currently assigned native counterparts by the Chinese government to manage their internal business affairs within China. This has led to accusations of copyright infringement by Chinese companies, similar to infringements that occurred during the Canton System. After the American Revolution and the Napoleonic Wars, Great Britain saw opening Chinese Trade as a path to economic recovery and as a means to expand Southeast Asian trade between Chinese and Indian ports but faced trade right difficulties in doing so.
Great Britain carried a heavy demand for tea and China began to impose silver payment on all exports which caused severe trade deficits and sales of silver and gold to China by Great Britain to pay the trade balances. Chinese trade power began to influence commodities markets putting pressure on English deficits (sound familiar?). The last straw for England would be the depletion of their silver reserves due to Chinese payments in the early 1800s, as they were on the Gold Standard and in a war with France. England was forced to borrow silver from other European countries and the US with gold, a dire economic position.
In 1817, British Parliament decided that empowering the Opium Trade in China would be the most effective weapon against the economic impositions of the Qing Dynasty. Britain had begun planting opium in the British Raj, particularly in cotton-growing regions of Bengal and Malwa. The Indians were wary of opium and only agreed to grow it if it was strictly sold to China of which Britain readily agreed. Opium sales to China from India would become the exclusive right of the British East India Company, but it also provided economic opportunity for smaller American opium traders. The Russell family took the lead in purchasing opium from Turkey and trading it to both Britain and China in exchange for medical opium and other luxury goods. Samuel Russell’s Russell & Company would become one of the largest economic players in the international opium, tea, and silk markets by 1842. Opium in the United States prior to 1850, was not used recreationally in the United States; recreational use would emerge with the Gold Rush, starting in 1849, in California; the shipping of Chinese workhands with opium trade experience to work in gold mines and California railroads would bring opium dens to major commercial centers like San Francisco. However opium use for recreational purposes would not become a major social epidemic until after the American Civil War with the emergence of Soldier’s Disease and morphine dependence.
The Chinese government protested the growing opium trade diplomatically but found it unable to control the growth of Opium sales out of Canton and the smuggling of opium to other restricted Chinese ports. In 1834 trade liberalization of opium in Great Britain opened up a vast amount of commercial interest in the Chinese opium trade. The increase in competition drove down opium prices and increased supply, making opium in China easily affordable and easily obtainable. By 1838 opium addicts in China grew from 4 million to 12 million, expanding the customer base for western opium dens. Imports of opium grew from 1400 to almost 2600 tonnes, allowing silver and gold to flow back into the western economies through consumer drug use. In response, the Emperor of the Qing Dynasty issued an edict in 1839, prohibiting the sale and smoking of opium in China and restricted imports to medical Opium only. The Emperor appointed his own drug czar, Lin Zexu, who attempted to arrest and seize opium shipments; when the foreign powers refused to hand over their stock, a ban on foreign trade was implemented to starve out the foreign businesses in Canton.
The pressure from the Emperor’s drug czar continued throughout 1839 as the British were caught selling opium through Macau. The Opium Cartel was outraged at the seizure of 20,000 chests containing 44 kilos of opium each. China became even more aggressive after the ‘Kowloon Incident’ in the midsummer, when Lin began banning food sales to the British and Portuguese colonies especially Macau, withdrawing Chinese citizens, blockading the ports and poisoning water wells. The British merchant fleets retreated to Hong Kong, starved out of their ports.
The Royal Navy under the orders of Lord Palmerston arrived and proceeded to escort Western ships to colonial ports. The British blockaded several rivers and ports causing a skirmish to break out with the Chinese blockade triggering the First Opium War. The British Navy easily destroyed the Chinese junkets and marine forces stormed and destroyed cities with their superior military technology. The conflict ended when the British defeated the Chinese military at the mouth of the Yangstze River, occupying Shanghai and forcing the Treaty of Nanking on the Qing Dynasty in 1842. The US signed a treaty with China called the Treaty of Wangxia, which the US desired to be separate in order to outmaneuver British interests.
The Treaty of Wangxia allowed US citizens only to be tried only by US officials and courts, created fixed tariffs, obtained the right to buy Chinese land, the right to learn Chinese and the same trade rights as Britain in return for outlawing the sale of Opium. However, the United States allowed opium sales by US traders to continue, ignoring their offenses and refusing to try them when petitioned by the Chinese government.
American trade in opium after 1842 rapidly expanded with East Indian and Turkish opium being introduced as a competitor to the Anglo-Indian Opium. The British, angry with the increased competition in opium markets, engaged in aiding Hong Xiuquan through Christian missionaries. Hong was a cult leader who had created the Taiping Heavenly Kingdom sect from a mixture of opiate use and Christian and Chinese religious traditions. His friend and British intelligence agent Feng Yunshan formed the Society of God Worshippers in 1844 that spread Hong’s religious ideas and destabilized southern and central China.
The Taiping Rebellion broke out in 1851 in the Chinese province of Guangxi after Hong declared he was the brother of Jesus Christ. In 1853, Taiping rebel forces seized Nanjing, making it their capital, and much of Southern China. The Taiping forces would make war against the Qing Dynasty, attempting to take both Shanghai and Beijing on several occasions, distracting the Qing Emperor from being able to counter the efforts of the western powers to increase the drug trade and play both sides of the rebellion.
The Second Opium War would break out just a few years later in 1856 over the Britain, France and the US’ demands for renegotiation of their treaties from the First Opium War. Britain wanted greater trade privileges than the other western powers, full legalization of opium, duty exemptions, insulating regulations and making English the official language of colonial lands. These demands would cause other Western powers to come forward making similar demands against the Qing government. China flat out refused leading to skirmishes between western and Chinese forces across the Chinese colonies. British and French incursions against Chinese forts decimated Qing forces that were already battered from fighting the Taiping Rebellion.
In 1858, the Chinese after losing a series of military battles against the Western powers surrendered a number of ports, allowed open access to the Yangtze River, allowed foreigners to travel in China and set up reparations. The Chinese Emperor embarrassed by the treaties ordered a large military contingent on the mouth of the river leading to Beijing. French and British forces demanded the contingent be disbarred, when the Chinese refused British and French forces marched on Beijing, devastating the Qing army and burning down the Emperor’s Summer Palaces. The Qing Dynasty surrendered with treaty of Tianjin which legalized the opium trade and allowed the British to sell Chinese servants in California as well.
The Russell family and the Opium Cartel witnessed the sectionalism occurring in the United States during this period and prepared the trade routes to bring opium and morphine back to the United States for military availability during the American Civil War. The founding of the Euro-American pharmaceutical industry was built around the brutal and unforgiving battlefields of the American Civil War. The Opium Cartel did not play favorites, they funded both Union and Confederate counterparts primarily from hard-to-account-for commerce bases in the relatively new state of California. Around 400,000 troops exited the brutal civil conflict, which lasted from 1861 to 1865, with opiate and morphine addictions. Many Civil War veterans with post-traumatic stress or would become opiate addicts following the war.
America, after Lincoln’s assassination, had come under the electoral control of the Republican Party of whom the Opium Cartel along with Big Finance immediately took control. The opium and banking financiers utilized their fortunes to promote Republican candidates and political machines. The Public Credit Act of 1869 outlawed Lincoln’s civil war greenbacks and imposed the gold standard by making US bonds payable only in gold. Members of the railroad, finance and opium consortiums held a large portion of these war bonds and were able to establish an illegal gold trading ring among the leading industrialist families, referred to in Ferdinand Lundberg’s America’s 60 Families. In1873, under Republican leadership, the Coinage Act would firmly establish the Gold Standard and end bimetallism in the United States and bring about the Long Depression. “The gold dollar became the standard dollar while the standard silver dollar was discontinued” however the Opium Cartel was permitted to keep using silver dollars for trade in China as “an ancillary silver trade dollar was issued for continued trade with China and the orient”.
The Opium Cartel profited heavily after the end of the Civil War as well through the importation of Chinese workers and slaves from the late 1860’s to the late 1880’s. Wealthy California industrialists, railroad tycoons and landowners supported this trade through Chinese front man in San Francisco’s Chinatown known as “The Six Companies”. The job of the Six Companies was to promote California abroad as Gold Mountain, playing on the emotions of disaffected Chinese ruined by the turmoil of the Chinese civil war and the Opium Wars. The Six Companies acted like a reverse operation of the original 13 Hong system for the western power. They were originally called “the Sam Yup, Yung Wo, Kong Chow, Wing Yung, Hop Wo and Yan Wo companies…and they exercised supervisory control over the Chinese labor class or “Coolies”” who the rich land owners used to displace the high cost of American labor brought in after the Gold Rush. “Through their agents in China, the Six Companies advanced money to emigrants who desired to come to the United States…when the immigrant arrived in this country, the Six Companies obtained a job for him or outfitted him for the mines and then saw to it that he repaid the loan, with interest.”
The Tongs worked with wealthy mining companies, banks and land owners to avoid having to pay expensive wages to citizen workers by being able to pay the Chinese next to nothing or sometimes not at all. The Chinese in California, because of this, were subject to intense racial hatred promoted by the landed class. One of the most powerful California monopolies was the Central Pacific Railroad, who through the Republican Party, worked with the Opium Cartel to supply Chinese rail workers; one of the railroad’s owner’s, Leland Stanford, founder of Stanford University, as Governor of California caused controversy when he publically railed against the Chinese labor threat appealing to racial hygiene while it was widely known that he employed thousands of wage slave Chinese laborers.
The Opium Cartel also profited heavily by supplying San Francisco’s Chinatown Tongs with large quantities of Chinese prostitutes for the California laborers. Prostitution of Chinese women, along with gambling halls and Opium Dens would become a major vice industry in California, leading to cozy relationships between the Chinese Tongs, the California landowners and the Opium Cartel in San Francisco. The Six Companies initially opposed the Tongs and their importation of prostitutes until the lucrative side business encouraged the Opium Cartel to support the Tong power in San Francisco’s Chinatown; many of the prostitutes brought in to work were turned into opium addicts by the Tongs and the Six Companies thought this besmirched the image of their business. “Tong prostitution in Chinatown would not cease until 1914 with the passage of the Red-Light Abatement Act” a Temperance Movement action to clean up San Francisco, which has become popular due to the heavy outbreak of west coast crime in the late 1800’s along with lynch mobs known as “Vigilance Committees”.
The Suey Sing and Hop Sing Tong (which has achieved recent fame due to the indictment of California State Senator Leland Yee’s involvement with gun running for Shrimp Boy Raymond Chow) “were the first known tongs to organize in about 1860 by the Chinese in the gold fields near Marysville, California as mutual benefit associations.” The tongs soon spread to the railroad construction camps, then to Chinatowns in Pacific cities and finally in Chinese communities throughout the US. By 1870, 22 tongs had been entrenched in Chinatown alone controlling all opium dens, gambling houses and bordellos. The Six Companies themselves evolved to become Tong-like organizations of their own influenced to do more business with the Opium Cartel and California landed interests.
The Opium Cartel’s power grew along with the power of the other 60 industrialist families that began to consolidate monopolies from banking (Morgan) to oil (Rockefellar) to railroad (Gould and Vanderbilt) to opium (Russell and Astor) to steel (Carnegie) and many other businesses that would the Robber Barons would transform into ‘American Big Business’. The American middle class would find themselves abandoned by the Republican Party after the Civil War with the defeat of the Southern Planters and clinging onto populist parties and Southern Free Silver interests led by William Jennings Bryan as the Republican’s catered to the needs of the now dominant industrialist class. The Opium Cartel was one of the biggest champions of the Republican machine at this time and empowered men like Senator Mark Hanna from Ohio to establish large political networks throughout the United States. Hanna became a major political operator for several Republican presidents throughout the Robber Baron period including James Garfield, Chester A. Arthur, Benjamin Harrison, William McKinley and to a small extent, Theodore Roosevelt.
The profits from Civil War morphine sales and the excesses of the Gilded Age would allow for the Opium Cartel to transform from its Chinese Trade roots into the global pharmaceutical powerhouses that exist today. Merck would be allowed to open in the United States in 1891. Eli Lilly under Republican stewardship “was able to survive and came out stronger than ever… Lilly operated as many other pharmaceutical businesses did—manufacturing and selling “sugar-coated pills, fluid extracts, elixirs, and syrups” in Indiana and the surrounding states”. Bayer introduced commercial heroin in 1898 which carried twice the potency of morphine by weight and proved to be more addictive than Asian opiates. Codeine, which was first synthesized in 1832, was also brought to market for commercial availability in the early 1890s.
Profits from the sales of commercial drugs and elixers soon become a popular commercial business and other smaller apothecaries using natural medicines such as medical marihuana, coca, st. john’s wort and many other herbal based remedies appeared to challenge the profits of the Opium Cartel in their new corporate form. Cartel profits from opioid and morphine addictions were immense and allowed them to lend monies to large banking and industrial entities including those owned by JP Morgan, John D Rockefeller and Andrew Mellon. Big Finance, Big Oil, Big Coal and Big Railroad would emerge at the end of the 1890s from the profits obtained of dealing with the Opium Cartel. Big Oil and Coal would supply the needs for the trains and ships needed to move the opium internationally, Big Railroad would provide national distribution and port access, and Big Finance would provide loans and banking options through the manipulation of silver and gold prices. The pyramid that is the wealth of America’s 60 richest old money families was built on the remnants of the British Opium Empire.
Republican Presidents and Congressman under the influence of the Opium Cartel which would now become ‘Big Pharma’ blamed the opiate addiction epidemics on the Chinese immigrants that had been brought to the US by the Opium Cartel servant traders. Several laws would be passed by Congress to ban Chinese immigration and restrict Chinese economic activity. Opium Dens in California, especially in San Francisco, continued to flourish due to the activities of the Chinese Tongs and their relationships with the local politicians and opium traders. Toward the end of the 1890’s with the advent of commercial heroin and widespread drug addiction, the Temperance Movement began to become a powerful political force aligning itself with the progressive eugenics movement. Temperance propaganda against opiate and alcohol abuse began to take effect and many addicts were using medical marihuana to treat their opioid dependence.
Big Pharma in the late 1890’s felt that their dominance of the narcotics market had to become absolute control for several reasons:
- The Temperance Movement was seeking to ban opium, their primary source of profit;
- Marihuana farmers and apothecaries who were using cannabis as a treatment to counteract opiate addiction and post-traumatic stress with Civil War veterans;
- US racial-religious attitudes and popular culture had turned against foreign prostitution and recreational drug use;
- Heroin had greater addiction potential than all of the opiates made at the time and Big Pharma wanted to push heroin over morphine, cannabis and opium;
- The Civil War had taught them that war contracts to supply medical opioids for battlefield medical needs were the most profitable and in order to be secured the narcotics industry would have to be cornered.
Big Pharma decided to make their big putsch to corner the drug market with the US Pure Food and Drug Act championed by their designer politician Theodore Roosevelt who had risen through the Republican ranks heavily controlled and sponsored by the owners of Big Pharma. Roosevelt secured the unholy alliance of the Pharmaceutical Industry with the Temperance and Eugenics movement, that evolved into a political and social beast the Republicans and the American society itself could hardly seem to control. Medical Marihuana and Opium were restricted and from 1898 to 1910 Heroin was openly commercially marketed as a ‘wonder drug’, cough suppressant, and as a cure for morphine addiction. Big Pharma sought to have heroin promoted over medical marihuana to weaken the marihuana market enough to seize control over it. In 1910, however, Big Pharma suffered a blow when it was found that heroin metabolized into morphine and they were regulated more aggressively by the Taft administration.
Big Pharma’s Golden Era would begin with the election of Woodrow Wilson, a Democrat, in 1913. The 60 Families had deposed of William Howard Taft by having Theodore Roosevelt run against him to split the Republican ticket. Taft had turned out be too ethical of a trust buster, much more so than Teddy who had merely used such terms for public platitudes. Taft had wounded some of the larger trusts empowered the by Big Pharma including the Morgan Banking Trust and the Rockefellar Oil Trust. Wilson seeking a new era of Democratic politics and firmly supported by Wall Street, the KKK and Eugenics lobby was the perfect compromise candidate for the Temperance Movement. The Temperance monster that the Republican Party had created, evolved during the 1910’s into a race based purification movement that sought to abolish all drug use to purify the white race and it had found its final form under the leadership of Woodrow Wilson. Wilson’s presidency would highlight some of the most egregious actions in the history of the United States with the apex of the American Eugenics movement, the Federal Reserve Act, the state by state prohibition of marihuana throughout Wilson’s presidency, the Harrison Narcotics Tax Act, the Federal Income Tax, the Federal Farm Loan Act, The Espionage Act of 1917, the Sedition Act of 1918, the Ludlow Massacre, the Red Scare, Alcohol Prohibition, and World War I itself.
World War I would serve as the provider and pathway to unmitigated financial power by the American oligarchy during the 1920s. Anglo-American and German pharmaceutical consortiums alike would profit immensely from the wartime opium, morphine and heroin contracts. Big Pharma worked in concert through Colonel Edward M. House with Big Finances war loans and the weapons industries delivery schedules to maximize profits. Millions of casualties in the largest war ever seen in the history of the world combined with restriction of available opiates under the international narcotics bans allowed Big Pharma to produce artificial opium shortages and sell their opioid products to the warring nations at obscene prices.
Big Pharma used its profits during the war to diversify into finance capital, producing Wall Street power players like the Union Banking Corporation of New York, W.A. Harriman & Co. later Browns Brothers Harriman and allying with the Rockefellars in National City Bank. Bernard Baruch and Samuel Pryor to profit from the arms trade. Big Pharma’s banking entities developed during this time would later serve to enhance their relationships with British and German companies. These entities would also enhance the careers of many prominent Republican politicians of whom Big Pharma would later help propel to primacy in both the 1920’s and mid-to-late 20th century.
Wilson toward the end of his presidency had come to dread the beast he had unleashed upon American society. The Federal Reserve Act had unified big business power in the United States and they had dominated his presidency utterly, transforming the US into an anti-union corporatist police state by the end of World War I that was both culturally conservative and xenophobic. Wilson opposed the Volstead Act but was overridden by Congress and the prohibition fervor that had come to dominate it. Alcohol, narcotics, Communism and the War were blamed heavily for the nation’s woes and full prohibition had come to be the constitutional result.
America in the 1920s would descend into a quagmire of organized crime, bootlegging, inequality and political corruption on a scale unseen before. Prohibition of medical cannabis and of many other natural drugs would open a pandora’s box that would come to curse the United States for a hundred years as organized crime rushed in to fulfill the demands for marijuana, opiates, and alcohol by the veterans of World War I suffering from post-traumatic stress and to meet the new cultural demands of the age. The Opium Cartel now transformed into Big Pharma, would retain private and privileged access to medical cannabis and opium throughout the century, limiting its availability to control the pharmaceutical market and produce byproducts for high prices at the American patient’s ultimate expense.
The 1920s will be discussed in the continuation of this series The Secret History of the War on Drugs with the rise of the Mafia in reaction to drug and alcohol prohibition, the evolution of the FBI, the heavy handed corruption of the Roaring 20s, how drug/alcohol prohibition and mafia wars contributed to the Great Depression and on the origins of the Federal Bureau of Narcotics
Quotes and References:
Lundberg, Ferdinand. America’s 60 Families. 1937.
Asbury, Herbert. The Barbary Coast. Thundermouth Press, Knopf Inc, New York. 1933.
David Pietrusza, 1920: The Year of Six Presidents(NY: Carroll & Graf Publishers, 2007), 191–2, 198–200, 253
Ebrey, Patricia Buckley, ed. (2010). “9. Manchus and Imperialism: The Qing Dynasty 1644–1900”. The Cambridge Illustrated History of China (second ed.). Cambridge University Press. p. 236. ISBN 978-0-521-19620-8.
Donna Young (April 15, 2007). “Scientists Examine Pain Relief and Addiction”. Retrieved 2007-06-06.
Peter Ward Fay, The Opium War, 1840-1842: Barbarians in the Celestial Empire in the Early Part of the Nineteenth Century and the Way by Which They Forced the Gates Ajar (Chapel Hill, North Carolina:: University of North Carolina Press, 1975).
Tsai, Jung-fang.  (1995). Hong Kong in Chinese History: community and social unrest in the British Colony, 1842–1913. ISBN 0-231-07933-8
“Opiate Narcotics”. The Report of the Canadian Government Commission of Inquiry into the Non-Medical Use of Drugs. Canadian Government Commission.
Madison, James H. (1989). “Manufacturing Pharmaceuticals: Eli Lilly and Company, 1876-1948”.Business and Economic History (Business History Conference) 18: 72. Retrieved 2013-02-20.